DEVELOPMENT LOAN BILL

Order for Second Reading read.

4.32 p.m.

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I have His Excellency's recommendation to proceed with the Bill. I beg to move, "That the Bill be now read a Second time."

Members will recall that on 15th August last year, this Assembly passed the Development Loan (Local) Ordinance, No. 50 of 1959, which was to enable the Government to raise locally loans not exceeding the value of $100 million to finance in part the cost of projects under the Development Estimates. You will be glad to know that under this Ordinance, three loans totalling $70 million were successfully floated.

In our development planning, loan capital is expected to be a major source of finance. As Members would have noted from the Government's financial talks with the United Kingdom Government in 1960, it is the intention to raise loan capital both locally as well as from external sources. Members would know, that in this context, the United Kingdom Government agreed to provide to the Singapore Government Exchequer loans of up to �5 million or $42.5 million to meet part of our capital expenditure under the Development Plan.

The Development Plan itself was prepared last year and completed before my departure in August to the United Kingdom for financial talks. The original Plan covered a five-year period, 1959/1964. As a result of further discussions with the World Bank Mission who visited Singapore last September, and taking into account the result of our financial discussions with the U.K. Government, it was necessary to revise in detail some aspects of the Plan. I referred to this matter in my last Budget Speech. The work of revision was an intricate operation. However, the exercise was completed by the end of January of this year and the Plan is now with the Government Printers. I intend to present the Development Plan at the next sitting of the Assembly for its approval on the 12th of April. Because of the lapse of time since the original Plan was prepared, it is necessary to restrict the Plan period to four years, i.e., 1960/64. To finance the Plan expenditure, loans will be raised both locally and overseas. The original Development Loan (Local) Ordinance, 1959, does not provide for loans raised externally. The Bill now before the House provides, in section 3, for the raising of loans in the London money market and for Exchequer loans negotiated with the Secretary of State.

Should we have occasion to raise loans from other external sources, such as the World Bank or the Import and Export Bank, it may be necessary either to pass amending legislation or to introduce new legislation. These matters are being examined in my Ministry. But it is best to leave that as a separate exercise and deal with it as and when the occasion arises.

The Bill before us, in addition to providing for loans raised in the United Kingdom, also raises the ceiling from $100 million to $400 million.

This is a substantial sum. But the amount is well within the borrowing capacity of the Singapore Government provided the yield from our revenues continues to expand, as it had done in previous years, and provided also that strict control is maintained over annually recurrent expenditure to avoid waste.

The Development Plan provides for a total expenditure of $871 million in the years 1960/64. I do not wish to enter into a discourse on the development plan as this is properly a subject for the next sitting of the Assembly. But I may perhaps be permitted to say a few words on the urgency of the problem. The main outline is familiar enough to all thinking persons. I am talking about the outline of the problem and not the outline of the plan. Here we are in the small island State with no natural resources. Our population is expanding at a prodigious rate. Unless something is done immediately, and on a scale unprecedented in our history, a decline in standards of living in Singapore is inevitable.

No country in the world owes Singapore a livelihood. They have even less responsibility to assure our prosperity. Our standard of living, one of the highest in Asia, is due to the exertions of our own people, their thrift, industry and ingenuity.

But today Singapore faces a problem that she has never had to face before. In the past, when things were really bad, large numbers of the population returned to their homeland, for the great majority of the population in pre-war years, for instance, was of immigrant origin. So we saw in the great depression of the 1930's the spectacle of hundreds of thousands of people returning to China and India. But today our population is a settled one. There is no place for us to escape to, should things go bad. Hence it is the responsibility of the Government to ensure that everything will be done within the limits of its capability to build for the future. The Bill before us enables the Government to build up the sinews of the economic strength of the State. The effort that has to be mounted is an immense one for there is no easy way out, faced as we are in a very tight situation in which the population is outstripping our resources. I shall deal with this theme in greater length at the next sitting of the Assembly when I present the Development Plan. In the meantime, all I need say is that this Bill is intended to make possible the mobilisation of our financial resources to make this Development Plan effective.

Sir, I beg to move.

Question proposed.

4.40 p.m.

Mr A. P. Rajah (Farrer Park): Mr Speaker, Sir, the Hon. the Finance Minister, in moving the Second Reading of the Bill, informed the House that the intention of this Bill was to increase the ceiling which had been set for the previous Development Loan (Local) Ordinance, No. 50 of 1959, from $100 million to $400 million. He also informed the House that under the previous Ordinance, $70 million had already been raised, leaving $30 million still to be raised. Sir, I wonder if the Finance Minister could inform the House whether it is the intention of the Government to raise $400 million under this Ordinance, and to raise another $30 million under the previous Ordinance; or what the intention of Government is. Under this Bill, although the explanatory statement says that it replaces the Development Loan (Local) Ordinance, 1959, it does not repeal that Ordinance. Therefore, it could well be that the Government, if it chose, could raise the full $400 million under this Ordinance and go for the balance of the $30 million under the Development Loan (Local) Ordinance, 1959. The Schedule is not concerned with any repealing section. It is merely a Schedule concerned with the definition of the expression "local stock". So that if this Bill is passed, the Government will, in effect, have at its disposal two Ordinances under which they could raise loans up to $430 million, if they felt so disposed. I am not saying that they should not raise that loan but, if the ceiling which the Government propose for the development loan over the next four years is $400 million, then it appears that the Government could, under the statutory provisions, if this Bill is passed, draw on another $30 million. That is the first point, Sir.

The second point is a matter of detail on clauses 3 and 4 which I will raise in Committee when the Bill is moved into Committee.

Mr Speaker: Dr Goh, in reply.

Dr Goh Keng Swee: Mr Speaker, Sir, just to clarify the point raised by the Member for Farrer Park. It is not the intention of the Government to make use of any surplus arising from the previous Development Loan Ordinance.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill. -[Dr Goh Keng Swee].

Bill considered in Committee.

[Mr SPEAKER in the Chair]

4.45 p.m.

Clause 1 to 3 inclusive ordered to stand part of the Bill.

Clause 4 -

Question proposed, "That clause 4 stand part of the Bill."

Mr Rajah: On a point of information, Sir, Clause 4 reads:

`The principal moneys and interest represented by stock issued...'- the words "represented by stock issued", I take it, would refer to the stock issued under clause 3 (2) (a) -

'...or by a loan raised in the United Kingdom, under the provisions of this Ordinance, are hereby charged upon and shall be payable out of the Consolidated Fund and assets of Singapore.'

This clause 4 takes in clause 3 (2) (a) and (b), omits (c), and says that anything in connection with clause 3 (2) (a) and (b) "are hereby charged upon and shall be payable out of the Consolidated Fund and assets of Singapore." But clause 4 leaves out:

`by means of loans made at the request of the Minister by the Secretary of State under the provisions of section 2 of the Colonial Development and Welfare Act, 1959.'.

Mr Speaker, Sir, if you will be good enough to look at clause 6, you will see that it deals specifically with loans raised under clause 3 (2) (c). Clause 6 reads:

`Any, loan raised under paragraph (c) of subsection (2) of section 3 of this Ordinance shall be on such terms as may be agreed between the Minister and the Secretary of State and shall be repaid by equal annual instalments of capital and interest combined so that such loan shall be repaid within the period for which the same was granted.'

Sir, clause 4, as it now stands, does not state whether or not moneys raised under clause 3 (2) (c) become payable out of the Consolidated Fund.

So the question I ask the Minister for Finance is this. If it is not payable out of the Consolidated Fund, then out of what fund would he propose to repay any loans incurred under clause 3 (2) (c)?

Dr Goh Keng Swee: I do not think I can accept the interpretation of the Member for Farrer Park. Clause 4 will not have any relevance to loans raised under clause 3 (2) (c) - that is, Exchequer loans. I would have thought that Exchequer loans would have come within the definition of loans raised in the United Kingdom under the provisions of the Bill, and therefore would be chargeable to the Consolidated Fund.

Mr Rajah: If the interpretation of the Minister for Finance is correct, then that is so. What he said would be correct. But it does look as if a loan raised in the United Kingdom under the provisions of this Bill, as drafted, refers to:

`The loan hereby authorised or any part of it may be raised either-

in London by the Crown Agents in accordance with the provisions of the General Loan and Inscribed Stock Ordinance;'.

Now any loans negotiated between the Minister and the Secretary of State appear to me not to be covered by the phrase in clause 4 "or by a loan raised in the United Kingdom". It appears to me that that phrase could only refer to clause 3 (2) (b). But if the Minister is satisfied that the phrase "or by a loan raised in the United Kingdom", in fact, covers clause 3 (2) (b) and (c), then, of course, I have nothing further to say. But if it does not, then the question will arise: out of which fund would he pay any loans which he negotiates with the Secretary of State?

Dr Goh Keng Swee: I can assure the Member for Farrer Park that unless the cost of servicing and interest payments on loans are chargeable to the Consolidated Fund, we are not likely to get any money from that.

Question put, and agreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5 to 17 inclusive ordered to stand part of the Bill.

The Schedule ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.